Millicom International Cellular S.A. (TIGO) Q3 2025 Earnings Call Transcript
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Overview
The earnings call summary presents a positive outlook with strong B2B growth, optimistic guidance for the Home business recovery, and expanding customer bases in key markets like Colombia and Guatemala. The interim dividend announcement further boosts investor confidence. Despite litigation and tax issues, management's strategic focus on efficiency, market expansion, and leverage control is reassuring. The Q&A section did not reveal significant negative trends, and the market cap suggests a moderate reaction. Overall, these factors indicate a likely positive stock price movement in the short term.
Key Financial Performance
Service Revenue $1.34 billion, representing a year-over-year decline of 0.5%. The decline was due to the application of IAS 21 for Bolivia, which negatively impacted service revenues by $74 million compared to last year. Excluding the FX impact, underlying service revenue growth accelerated to 3.5% year-over-year.
Adjusted EBITDA $695 million, an all-time high with a margin of 48.9%. This represents a 23.8% year-over-year increase, influenced by one-time restructuring and M&A charges in 2024. Normalized growth was 10% year-over-year.
Equity Free Cash Flow $243 million for the quarter, totaling $638 million over the last 9 months, marking an 18.1% year-over-year increase. The growth was driven by increased profitability and lower finance charges, offset by higher cash CapEx and litigation settlements.
Mobile Service Revenue Up 5.5% year-over-year, driven by ARPU expansion in prepaid and migration from prepaid to postpaid. Postpaid base grew 14%, reaching 8.9 million customers.
Home Service Revenue Flat year-over-year, a marked improvement from a nearly 5% decline a year ago. Supported by a convergence strategy bundling multiple services under one plan.
B2B Service Revenue $231 million, up 5.3% year-over-year in constant currency. Growth driven by a 10% increase in small business clients and a 35% year-over-year growth in digital services like cloud, cybersecurity, and SD-WAN.
Colombia Service Revenue $364 million, up 6.5% year-over-year. Growth driven by an expanding postpaid customer base, robust B2B performance, and a turnaround in the home business.
Guatemala Service Revenue $366 million, up 3.6% year-over-year. Growth driven by effective customer base management and ARPU increases through prepaid to postpaid migration.
Panama Service Revenue $170 million, flat year-over-year. Gains in postpaid subscribers were offset by a decline in B2B revenue from earlier government contracts.
Paraguay Service Revenue $143 million, up 3.5% year-over-year. Growth achieved through expansion in both prepaid and postpaid customer bases and stable ARPUs.
Bolivia Service Revenue $84 million, up 6.1% year-over-year in constant currency. Growth reflects currency stabilization and increased service revenue.
Adjusted EBITDA Margin in Guatemala 56.6%, up 147 basis points year-over-year, driven by service revenue growth and operational efficiencies.
Adjusted EBITDA Margin in Colombia $161 million, up 17.3% year-over-year. Growth driven by top-line growth and disciplined OpEx management.
Adjusted EBITDA Margin in Panama 52.2%, up 480 basis points year-over-year, driven by cost savings from efficiency programs.
Adjusted EBITDA Margin in Paraguay 51.4%, up 11.8% year-over-year, reflecting operational discipline and customer base growth.
Adjusted EBITDA Margin in Bolivia 49.7%, up 649 basis points year-over-year, driven by cost efficiencies and dedollarization efforts.
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Operating Highlights
Mobile Service Revenue: Strongest organic growth since 2021, up 5.5% year-over-year, driven by ARPU expansion in prepaid and migration from prepaid to postpaid.
Home Business: Added 60,000 new customers, up 5.4% year-over-year. Revenue was flat year-over-year but improved from a 5% decline a year ago.
B2B Segment: Service revenue reached $231 million, up 5.3% year-on-year. Digital services revenue rose 10%, led by cloud, cybersecurity, and SD-WAN growing around 35% year-over-year.
Acquisitions of Uruguay and Ecuador: Broadened footprint to 11 countries. Uruguay adds $246 million in annual revenues and $93 million in adjusted EBITDA. Ecuador adds $490 million in revenues and $161 million in adjusted EBITDA.
Colombia Market: Service revenue grew 6.5% year-over-year, driven by postpaid growth, B2B performance, and a turnaround in the home business.
Guatemala Market: Postpaid customers grew 20%, driving mobile service revenues up 4.6%. Operating cash flow grew 22% year-on-year.
Panama Market: Postpaid customers grew 15%, supporting 7.1% mobile service revenue growth. Achieved record EBITDA margin of 52.2%.
Adjusted EBITDA: Reached $695 million, with a record 48.9% margin, reflecting operational efficiency and cost discipline.
Equity Free Cash Flow: Achieved $243 million for the quarter, on track to meet the $750 million target for 2025.
Leverage: Net leverage reduced to 2.09x, with a target to remain below 2.5x.
Tower Sales: Completed sale of tower companies in El Salvador and Honduras for $975 million, concluding the infrastructure monetization plan.
Costa Rica Legal Matters: Settled litigation with Telefonica related to the 2020 acquisition attempt. Filed an appeal against the regulator's decision to prohibit the proposed combination with Liberty Latin America.
DOJ Investigation: Recorded a $118 million provision for the ongoing investigation, with more details expected soon.
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Risk or Challenges
Regulatory Hurdles in Costa Rica: The Costa Rica regulator has prohibited the proposed combination with Liberty Latin America, citing potential competitive effects that could not be mitigated. The company has filed a formal appeal, but this decision creates uncertainty and potential delays in strategic plans.
DOJ Investigation: A $118 million provision was recorded this quarter related to an ongoing DOJ investigation. The financial impact and resolution timeline remain uncertain, posing a risk to financial stability.
Currency Devaluation in Bolivia: The application of IAS 21 for Bolivia negatively impacted service revenues by $74 million this quarter. Although there are signs of stabilization, the currency devaluation remains a risk to revenue and profitability.
Litigation Settlement in Costa Rica: A settlement related to the 2020 acquisition attempt with Telefonica resulted in a financial impact, affecting cash flow and operational focus.
Government Contract Decline in Panama: B2B revenue in Panama declined due to the execution of government contracts earlier in 2024, impacting overall revenue growth in the region.
Integration Risks for Uruguay and Ecuador Acquisitions: The acquisitions of Uruguay and Ecuador bring opportunities but also risks related to integration, achieving synergies, and maintaining operational efficiency.
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Guidance & Outlook
Equity Free Cash Flow Target: The company remains firmly on track to deliver its $750 million equity free cash flow target for 2025.
Leverage Target: The company is committed to maintaining leverage below 2.5x, even as it integrates acquisitions in Ecuador and Uruguay in Q4 2025.
Home Business Revenue Growth: The company expects positive revenue growth in the home business segment in the next quarter, following a marked improvement from a nearly 5% decline a year ago.
B2B Segment Growth: The B2B segment is scaling profitably, with digital services like cloud, cybersecurity, and SD-WAN expected to continue driving growth, having already grown around 35% year-over-year.
Colombia Business Growth: The company expects continued profitable growth in Colombia, supported by an expanding customer base, robust B2B performance, and a turnaround in the home business.
Panama Business Efficiency: Panama is expected to maintain its position as one of the company's most efficient operations, with a record EBITDA margin of 52.2% achieved in Q3 2025.
Acquisitions in Uruguay and Ecuador: The acquisitions are expected to enhance earnings quality through greater scale and macroeconomic stability, unlocking meaningful synergies and stable cash generation.
Costa Rica Regulatory Appeal: The company has filed a formal appeal against the Costa Rica regulator's decision to prohibit the proposed combination with Liberty Latin America and remains confident in the transaction's benefits.
Colombia Transactions: The company expects the EPM and Telefonica transactions in Colombia to close in the first quarter of 2026.
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Shareholder Return Plan
Dividend Payment: We paid $125 million dividend in line with our approved dividend policy.
Share Repurchase: No mention of a share repurchase program was made in the transcript.
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Key Q&A
Q:What is the Ecuador and Uruguay transactions leverage? Where do you expect to be at the end of the year? What is the net impact from these transactions in year's cashflow?
A:The leverage is currently 2.09x. Normalizing for the tower transaction, it would have been 2.33x. Closing Uruguay adds about 0.1x, and Ecuador adds about 0.1x as well. Pro forma, the leverage is close to 2.3x as of Q3, normalized for the tower transactions.
Q:In Ecuador, there was a spectrum renewal news. Would the burden of payment fall on Millicom?
A:The spectrum renewal has two parts: a license renewal costing approximately $115 million, paid by Telefonica as a condition precedent to closing the transaction, and an upcoming 5G auction expected in late this year or early next year, with mid- to mid-high double-digit million dollar spectrum charges payable in the first half of 2026.
Q:Could you please provide more details on the DOJ provision? What is the issue related to? And when can we expect there to be a resolution?
A:The company is in litigation with the DOJ. The provisions printed this quarter reflect the expected outcome. More details will be provided shortly.
Q:What is driving the higher tax provision in Nicaragua?
A:The higher tax provision is due to tax litigation. The company settled with the administration, and the payment delta between what was settled and what was already paid and provisioned caused the increase. Payments will be made partially in Q4 and Q1 to finalize the settlement.
Q:What is the future course of action in Costa Rica if the appeal for the regulatory decision gets rejected?
A:The company believes the merger with Liberty is beneficial for Costa Rica and the industry. If the appeal is rejected, the focus will shift to strengthening the operating model, reinforcing infrastructure, channels, and cost efficiencies to bring the operation back to growth.
Q:Could you provide an outlook for CapEx for 2026? How are you seeing this line behaving next year?
A:The company expects to maintain CapEx at around $700 million, leveraging a refined model that focuses on demand-driven investments and efficiency.
Q:What is driving the margin expansion across the board, particularly in Colombia?
A:In Colombia, margin expansion is driven by organic growth, reduced direct costs due to efficiency initiatives, and flat OpEx despite increased commercial investments. At the group level, margin expansion is a mix of organic growth and one-offs like severance and M&A costs from last year that are absent this year.
Q:Where should leverage peak considering dividends, potential settlements of legal matters, and financing needs?
A:Leverage is expected to peak at around 2.5x, considering the addition of Uruguay, Ecuador, EPM, and Coltel transactions. The company has over $900 million in cash and plans tactical debt issuance, focusing on local currency debt.
Q:Are you comfortable with the mix between HoldCo and OpCo debt?
A:Yes, the company is comfortable with the current mix, with 40% of debt at HQ. The strategy is to maximize local currency debt unless prohibitively expensive.
Q:Can you provide any color on the new countries you just entered, Uruguay and Ecuador?
A:In Uruguay, the focus is on ARPU development, prepaid-to-postpaid migration, and device sales. In Ecuador, the focus is on network quality and expansion, especially in Guayaquil and the coast, leveraging new spectrum for 5G.
Q:What is the update on the spectrum auction in Paraguay and the competitive environment with a new entrant expected to launch 5G coverage?
A:The company did not participate in the spectrum auction due to unfavorable conditions but is working with the government on other spectrum segments. The new entrant is not seen as a serious threat due to the challenges of building a full telco operation from scratch.
Q:What is the update on the closing of the deal in Colombia?
A:The EPM transaction is on track to close around year-end or early Q1. The Telefonica deal is awaiting merger approval and a deal with La Nacion, expected to close in Q1 if all conditions are met.
Q:Why were the remedies for the Costa Rica deal not enough, and how long does the appeal process take?
A:The regulator argued that no remedies could make the transaction viable, which the company disagrees with. The appeal process duration is uncertain.
Q:What are the upcoming spectrum auctions in the rest of the portfolio?
A:The focus is on the 5G spectrum auction in Ecuador in Q1, which will strengthen the network and enable 5G coverage.
Q:How has competition evolved in Guatemala?
A:Competition from Claro increased earlier in the year, but the company responded with targeted actions at the point of sale, improved offers, and network enhancements, stabilizing the situation.
Q:Review of Unclear Management Responses
A:The management avoided providing detailed answers regarding the DOJ provision, stating only that more details would be shared shortly. Additionally, the appeal process duration for the Costa Rica deal was not clarified.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ARPU expansion
America Sutel
America acquisition
America financials
BB momentum
BB platform
BB segment
BC home
Bart financials
Colombia front
DOJ investigation
EPM hand
Guatemala
Home service
Slide
TIGO
Uruguay Ecuador
cell site
detail
discipline
experience
footprint
market share
matter
migration
milestone
party
position
purpose
review
scale
service revenue
share revenue
site market
subscriber
tower transaction
TIGO Transcript
Millicom International Cellular S.A. (TIGO) Q1 2026 Earnings Call Transcript
Positive5-12
The earnings call reveals strong financial performance with record revenue and EBITDA margins across multiple regions. Despite some restructuring costs, the company projects sustained growth and positive margins. The Q&A highlights sustainable growth in Colombia and Paraguay, though with some one-offs. Management's cautious guidance adjustment and focus on operational execution rather than M&A suggest stability. The market cap indicates moderate stock reaction, leading to a positive stock price movement prediction.
Millicom International Cellular S.A. (TIGO) Q4 2025 Earnings Call Transcript
Positive2-26
The company's strong financial performance, including record high revenue growth in several regions and improved margins, is a positive indicator. The optimistic guidance and strategic plans for acquisitions and efficiency improvements further support a positive outlook. However, concerns about leverage and restructuring costs may temper some investor enthusiasm. Overall, the positive elements outweigh the negatives, suggesting a stock price increase of 2% to 8% over the next two weeks.
Millicom International Cellular S.A. (TIGO) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call summary presents a positive outlook with strong B2B growth, optimistic guidance for the Home business recovery, and expanding customer bases in key markets like Colombia and Guatemala. The interim dividend announcement further boosts investor confidence. Despite litigation and tax issues, management's strategic focus on efficiency, market expansion, and leverage control is reassuring. The Q&A section did not reveal significant negative trends, and the market cap suggests a moderate reaction. Overall, these factors indicate a likely positive stock price movement in the short term.
Millicom International Cellular S.A. (TIGO) Q2 2025 Earnings Call Transcript
Positive8-7
The earnings call reveals strong financial performance with record high EBITDA margins across regions, driving positive sentiment. Growth in postpaid customer base and revenue, coupled with strategic CapEx allocation and cost control, further supports optimism. Despite some competitive pressures and regulatory uncertainties, the company's focus on ARPU growth and digitalization initiatives is promising. The market cap suggests moderate volatility, but overall, the positive financial metrics and growth strategies indicate a likely stock price increase in the short term.
TIGO Report
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